Facilitating SME Growth

We believe that this is a path less travelled and we have put our business around it. We started off with investment banking and while we kept building on the investment banking side, we also did quite a few deals that involved buy outs, sell outs and raising funds through PEs.

Please take us through your business model? 

At Sarthi our focus has been only the small and medium enterprises. We believe that this is a path less travelled and we have put our business around it. We started off with investment banking and while we kept building on the investment banking side, we also did quite a few deals that involved buy outs, sell outs and raising funds through PEs. After that we added the advisory services arm and also got the license of becoming an investment banker in December 2012. We also have an angel fund that we have launched this year. We are one of the top three merchant bankers in the BSE SME segment. 

There are a huge number of SMEs. You said that you are selective, so do you follow the top down approach? 

The deal size of three to eight million is a very primary factor that will give us the kind of focus to work. But definitely, what we chase around is a good business model, promoters and scalable business plans.

The biggest fear about SMEs is transparency. That is where the merchant bankers come into play as you become the face of the company. 

I agree with you that the merchant bankers are the brand ambassadors of the issue. However, it is not a single person or market participant’s job. It is a collective process where, from the regulator to policy makers to exchanges to the merchant bankers everybody has to work together. As I told you we are a bit selective on choosing our clients and that will be the differentiator over a period of time. 

So do you approach the companies that this is an avenue to raise risk free capital or are the companies becoming aware in this respect? 

We have been operating in this field for quite some time and we have a set of people with whom we deal day in and day out. So there was an initial push to make them go public. 

What is your take on the maturity level of the Indian Promoters to handle the pressure of being a publicly listed company? 

Awareness at the promoter levels is not that strong. Definitely that is also evolving. 

How fast are we evolving as a business model on taking SMEs to the markets? 

We are very dedicated. 

How much money have you helped raise until now? 

As mentioned earlier, we have done three issues and helped raise around Rs 25 crore. After listing how co-operative have these SMEs been in continuing a relationship? Normally the mandates are prefixed. It is not just upto the listing. The kind of action plan that we have includes post listing matters also. The idea is to create value out of the listing and make the investors benefit out of it. That is what has been keeping us busy in this kind of market too. 

What is your take on the liquidity concerns? 

This is a role of the market makers and the merchant bankers together. Initially there are concerns about liquidity, but as and when the awareness improves this issue will be addressed as well.